024. What Toyota can teach the farm

Modern Farm Business

After WWII, Toyota took quality and efficiency to heart, which yielded one of the most respected and successful manufacturing companies in the world. Their success isn’t a fluke, and the practices and principles they mastered can help farms improve as well.

Back in episode 4 we reviewed three strategic approaches to business and how, for most farms, the best one to be world-class at is being a low-cost-per-unit producer. In this episode we are going to explore using the Toyota Production System (TPS) as a case study for efficiency. You may ask, “What do production agriculture and automobile manufacturing have in common?” Both industries take raw materials and apply a process to create a finished product the market is willing to buy.

What made Toyota what we see today? 1. Eli Whitney: Interchangeable parts stressed, for the first time, the quality and replaceability of individual parts vs. regarding the entire machine as a craft piece 2. Henry Ford: Reversed the processes used in slaughterhouses to create the assembly line WWII: United States had to build a lot of war machines in a very short period of time—quality machines made by untrained employees with little supervision and management. The product surpassed expectations and helped us win the war. 3. W. Edwards Dening: Student of the lessons learned during wartime manufacturing, he sought to help U.S. manufacturers after the war to implement these quality practices and increase efficiency, but American companies preferred to continue using their pre-war processes 4. Japan, as part of their rebuilding effort, invited Dening to share his concepts of quality and efficiency. The Japanese were eager to learn some lessons from the nation that had defeated them in war. 5. Ultimately this led to the Japanese domination in manufacturing quality and efficiency. Born were the concepts of kaizen and lean, which gave rise to the Toyota Production System. The TPS is all about quality through (among other things) reduction of variation, overload and waste.

TWO AREAS OF THE LEAN PHILOSOPHY Lean Principles 1. Reduce waste: Transportation, waiting, defects, inventory, movement, extra processing, etc.. 2. Improve continuously: How the organization responds and learns. Finding lessons in failures and applying them going forward. 3. Strengthen supplier relationships: Contrary to the predominant mindset of the day which said a company should spread its business around to various suppliers to find the best deal, Toyota kept its business with few suppliers and strengthened those relationships, giving them more quality control and more power over efficiency, and allowing them in turn to help their suppliers as well. 4. Level the load: Investigate bottlenecks in the business model and address ways to shift the load to avoid the backups before they occur.

Lean Leader - Bringing in this philosophy requires leadership. Lean leaders should excel at improving the lean skills of the organization in five key areas: 1. Understand the customer: Needs, wants, satisfaction level...Spend time soliciting feedback, etc.. 2. Continuous improvement: Environment of cooperative learning wherein mistakes happen. What went wrong? Why? How can we improve? 3. Process and Results: Balanced approach. “However beautiful the strategy, you must occasionally look at the results.” 4. Build people: Help people gain skills and understanding through guided problem-solving so they can think on their feet when you’re not there. 5. Create a culture to sustain the lean mindset: This is not a one-and-done quick fix. It’s a simple, unglamorous approach to business that creates the need to improve—even if just a little bit—every day.

HOW CAN YOU BECOME THE TOYOTA STORY WHERE YOU FARM?

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See you next week!